Yawkey Trust acknowledges conflict

After $15m donation to BC, rules to change

By Frank Phillips, Globe Staff, 9/6/2003

In an agreement with Attorney General Thomas F. Reilly, the Yawkey Foundation will be allowed to follow through with a controversial $15 million donation to Boston College but will tighten its conflict-of-interest procedures.

Jamie Katz, head of the attorney general's public charities division, said lawyers for the foundation, named for the late Red Sox owners, agreed to enforce the rules that require trustees with potential conflicts to recuse themselves from board discussions on the matters and leave the room when a vote is taken. Several trustees have close ties to BC.

While there will be no changes to the rules, the two sides agreed to a stricter interpretation of them, Katz said. "They have agreed to adjust their proceedures," he said.

The attorney general's focus was to come to some agreement on the meaning of the rules, Katz said. "The bylaws are not crystal clear," he said.

The $15 million grant, to build a new athletic center, is the third-largest gift in the Jesuit college's history.

The Globe reported in May that the gift to BC raised questions of potential conflict because two members of the board, executive director John Harrington and former BC board chairman Charles Clough, are currently BC trustees. Another Yawkey board member, J. Donald Monan, is a former BC president who currently serves both as chancellor and a trustee.

The foundation's conflict of interest rules, which Reilly imposed when its endowment grew to nearly $1 billion after receiving $420 million from the sale of the Red Sox, states that a board member cannot "propose any grant to . . . any entity with the respect to which the Trustee is an Interested person."

Under the current by-laws, if a majority of the 10-member board determines a conflict exists, the trustee cannot be present when a vote on the matter is taken. Reilly's office argued that the common practice by foundation board members is for a trustee to leave the room during the discussion as well as the vote.

Clough told the Globe that Harrington and Monan explained BC's application when the foundation board approved the grant at its April meeting. But Clough said neither he, Harrington, or Monan lobbied the board to approve the grant.

"There was discussion by the board during the presentation. At no time during these discussions did Harrington, Monan, or I advocate for, or exercise any influence in favor of, the Boston College proposal," Clough wrote in a letter to the Globe after the story appeared. The three men then "recused" themselves from the vote, he said.

Katz said the attorney general's office did not attempt to ascertain the facts surrounding the board's approval of the BC donation. "We did not engage in a fact-finding that led to conclusions," he said. "We expressed concerns and raised issues. They have made some adjustments that we are comfortable with." In a brief statement, Jodi D'Urso-Matthews, spokeswoman for Yawkey Foundation, said the foundation had "had a productive dialogue with the attorney general's office and anticipate continued cooperation moving forward."

Reilly has been highly critical of the Yawkey Foundation, including delivering a sharp rebuke to Harrington for his role in directing the foundation's $25 million gift to Massachusetts General Hospital, saying it was "an absolute violation" of an agreement he asserted the former Red Sox chief executive made with him. Reilly said the foundation had vowed to donate to smaller organizations that did not have large endowments like those at BC and MGH.

Harrington blasted back, saying Reilly's charge that the foundation is spending money like "drunken sailors" was an "insult."

Since the flare-up over the BC donation, the foundation has directed most of its funding to grass roots agencies in low-income neighborhoods. In June, it announced a $15 million award to Boston Medical Center to build the J. Joseph Moakley Medical Services Building that it said "will fill a major gap in the cancer care for Boston's minority and low income residents."